Thomas Weisel Partners Group Inc. Q2 2008 Earnings Call Transcript

Thomas Weisel Partners Group Inc. (TWPG)

Q2 2008 Earnings Call

July 30 2008 5:00 pm ET

Executives

Thomas Weisel - CEO

Shaugn Stanley - CFO

Lionel Conacher - President and COO

Analysts

Rich Repetto - Sandler O'Neill

William Tanona - Goldman Sachs

Lauren Smith - KBW

Presentation

Operator

Good afternoon. Thank you for joining the TWP Earnings Call.

I have been asked to remind you that today's call includes forward-looking statements and those statements represent beliefs regarding future events that by their nature are uncertain. Actual events may differ possible materially from what is indicated or implied in those forward-looking statements and no commitment is made to update them. For discussion of some of the factors that could affect those statements, pleases see the risk factors set forth in TWP's most recent reports filed with the SEC.

This audiocast is copyrighted material of TWP and may not be duplicated reproduced or rebroadcast without our consent. As a reminder today's call is been recorded.

I will now turn the call over to the Chairman and CEO Mr. Weisel. Please go ahead sir.

Thomas Weisel

Thank you, and good afternoon. I will provide some opening comments. Then Shaugn Stanley, our CFO, will give details on the financials, followed by Lionel Conacher, our President and COO, who will give an update on the firm.

Second quarter proved again to be challenging for capital markets, especially, with respect to the new issue environment in the US, Canada and Europe. On the other hand our Investment Banking revenues increased to 100% from the first quarter.

The entry into the resource business through the acquisition of Westwind proved to be timely, as much as energy mining sectors contribute 32% of total Investment Banking revenues in the first half of the year.

At this time it is unclear when the environment will improve. Despite of this difficult environment we continue to concentrate on positioning ourselves so that we can capitalize when a recovering market occurs.

We also remain committed to our growth initiatives to strengthen the firm. Market conditions have provided us with an opportunity to hire top tier talent that has recently become available in the market. We have continued to build out the middle markets business, our European sales operations and our asset management platform.

We have also addressed underperforming areas of the company, including the restructuring the convertible securities business and redirecting the private equity fund-to-funds effort in India. We will provide more detail on all these developments later in the call.

In addition, we are maintaining our focus on the strengths of our balance sheet with substantial liquidity. As of June 30th, our available cash and cash equivalents were $125 million versus the $111 million in the first quarter, of which approximately a $100 million was being used to capitalize our broker-dealers. A low level of cash used in the second quarter allowed us to endure the continued adverse market conditions.

We have taken steps to realize non-compensation savings of over $3 million by the end of this year. We are thoroughly evaluating opportunities to further reduce non-compensation expense which Lionel will review with you later.

As we recently announced, we are pleased that Shaugn Stanley has returned as our Chief Financial Officer. Shaugn has been with TWP since inception and brings substantial institutional knowledge and experience to his position.

I will turn now the call over to Shaugn, who will give you details on our financials.

Shaugn Stanley

Thanks, Tom. We recorded a net loss of $10.1 million and a diluted loss per share of $0.31, adjusting for non-cash after tax charges of $1 million or $0.03 per share related to our initial public offering, and $2.5 million or $0.08 per share related to the amortization of intangible assets acquired in the Westwind Partners transaction. We recorded a non-GAAP net loss of $6.6 million and a non-GAAP diluted loss per share of $0.20.

As of June 30, our excess cash and net short-term assets, excluding broker-dealer capital, were approximately $30 million. Our cash loss in the quarter was $5 million after adjusting for non-cash items included in our pre-tax loss.

Our broker-dealer entities maintained capital in excess of regulatory capital requirements of approximately $68 million as of June 30. If necessary we can increase the cash at the parent company by $48 million, while continuing to operate the broker-dealers with adequate capital.

Given our liquidity position and the relatively low level of cash used in the second quarter, we are comfortable with our ability to continue to manage through this difficult environment. On this call we are comparing current results against the corresponding unaudited 2007 pro forma combined second quarter results for Thomas Weisel Partners and Westwind Partners. In our press release we also disclosed these pro forma amounts and on our website we are posting pro forma results for each quarter of 2007.

Our total net revenues were $60 million in the second quarter of 2008 compared to $97.3 million in the year ago quarter and up from $48.9 million in the first quarter of this year. Our pre-tax loss of $16.9 million compares to pre-tax income of $13.4 in the year ago quarter. As a significant improvement over the pre-tax loss of $26.5 million we incurred in the first quarter of this year.

Investment banking revenues were $22.9 million in the second quarter compared to $46.7 million in the second quarter of 2007 and to $11.5 million in the first quarter of this year. We completed 32 transactions in the second quarter, compared to a combined total of 55 in the second quarter of 2007 and 23 in the first quarter of this year.

Of our Investment banking revenues, we generated $13.8 million in capital raising, and $9.1 million in M&A. Investment banking revenues by industry were led by technology, representing 43%, followed by 27% in energy, 19% in healthcare, 9% in mining, and 2% in consumer.

Brokerage revenues were $34.9 million, compared to $30.7 million in the second quarter of 2007 and $36.1 million in the first quarter of this year. Asset management revenues were $1.9 million, compared to $18 million in the year ago quarter and $350,000 in the first quarter of this year. Management fees were $3.50 million, private equity gains were $330,000 and net losses on other securities totaled $1.6 million, attributable to the unrealized loss on our warrant portfolio.

Compensation and benefits decreased 21% in the second quarter to $41.8 million, compared to $52.8 million in the second quarter of 2007. Our compensation ratio increased to 67% in the second quarter from 58% in the year ago quarter, and decreased from 76% in the first quarter of this year. Our second quarter ratio is above our goal of 60% due to lower than expected revenues combined with severance amounts of $1.2 million and fixed elements of compensation such as salaries, guarantees, taxes, benefits and equity award expense.

Non-compensation expenses increased $4 million to $35.1 million in the second quarter compared to the second quarter of 2007, and remained essentially flat compared with the first quarter of this year. Excluding the $1 million increase in intangible amortization expense, our non-comp expenses decreased 900,000 from the first quarter of this year.

Non-compensation expenses increased in following areas, compared to the pro forma year ago quarter. Broker execution and clearing expenses increased $1.2 million, compared to the second quarter of 2007, as a variable expense related to the increase in brokerage revenues. Communication and data processing increased $700,000 or $0.7 million, mainly due to the higher market data prices.

Other expenses increased $1.6 million to $7.6 million from the second quarter of 2007, mainly due to the higher non-reimbursed investment banking legal expenses and legal fees associated with the wind down of our operations in India. Our effective tax rate was 40% in the second quarter of 2008. This compares to 38% in the second quarter of 2007.

I will now turn the call over to Lionel.

Lionel Conacher

Thanks, John. Let me start by reiterating Tom's comment that we are committed a valuable franchise by focusing on improving our revenue generating capability or at the same time aggressively reducing cost. Just the beginning of the year, we were effective in reducing our work force by approximately 194 employees, and over the rest of the year, we have made 76 key hires.

Today, our headcount stands at 614, excluding pending termination and we expect headcount to be approximately 600 by the end of the year. We have been successful in augmenting our investment banking healthcare team in the past two months. We recently hired Ralph Sutton as the Managing Director focused on Medical devices and medical technology, and Jason Moran as Managing Director focused on biotechnology, specialty pharmaceutical and molecular diagnostics.

Ralph brings 15 years of experience to our platform and was most recently with Bear Stearns. Jason brings 12 years of experience and was previously with Piper Jaffray. We have also expended our software, media and telecom offering by adding Robert Nabholz as Managing Director focused on telecommunication services. Bob brings over 20 years of industry experience and was most recently a Senior Managing Director at Bear Stearns.

In our brokerage business we have hired Jon Fredericks from Merrill Lynch as the Managing Director on the Canadian trading desk, focused on the energy sector, and Chris Richards from Banc of America Securities as Managing Director on the New York trading desk, focused on US financial and industrial stock. Both bring extensive experience to our brokerage platform.

In our research effort, we added Raj Denhoy, as the Director covering medical devices sector and Fitzhugh Taylor as Director and Senior Equity recently covering the restaurant industry. We expected to continue to improve our investment banking and brokerage businesses with the addition of exceptional talent.

As Tom mentioned, since the beginning of the second quarter, we have scrutinized non-compensation expenses, and we have identified tangible 2008, non-compensation savings of over $3 million, as a result of renegotiating service contracts, reducing non-essential travel and other occupancy cost. Additionally, we are continuing to review possible real estate rationalization and technology and information services reduction, as well as cutting back on marketing and promotion cost.

I will now turn to the performance of our operations. In banking we have seen an improvement compared to the first quarter. Capital raising revenues increased by 88%, plus a substantial increase in private financing and M&A by over 120%.

In the second quarter, we led financings for Nuance Communications and Constant Contact, two of only seven US public tax equity offerings in the second quarter. Additionally, we participated as the sole book manager for three Canadian PIPEs in the resource sector, including Nevoro, Colombia Goldfields and Whitemud Resources.

While the IPO market is struggling, we continued to offer our equity and debt financing capabilities to private companies, and have completed offerings including Xunlight in the alternative energy space, Paxton in the energy space and Medical Depot in healthcare.

Our advisory business picked up during the second quarter with completion of six transactions, including advising Iomega Corporation's sale to EMC Corporation for $215 million, Nuance Communications purchase of the eScription for $400 million.

So far in the third quarter we have completed the sale of Frontier Pacific Mining to Eldorado Gold Corporation for C$179 million, and additionally Saxon Energy Services sale to Schlumberger and First Reserve Corporation for approximately $590 million, which is expected to close in the second half of this year.

Our average revenue per transaction increased to $717,000 from $500,000 in the first quarter. On the US side average revenue per transaction is in excess of $1 million, and in Canada, which is typically lower, we were $390,000 per transaction this quarter. Of particular note our average revenue per resource transaction increased to approximately $500,000 this quarter.

Our Investment Banking backlog, which consists of number of filed, announced and engaged transactions at the beginning of the third quarter is down from the second quarter. On file we currently have a 19 IPO's and one follow on, for which we are book our lead manager on eight. We recently announced three M&A transactions that we expect to close in the second half of the year.

In brokerage growth in our Electronic Trading platform improved cross border flows into Canada, higher revenues in Europe continue to strengthen our middle markets business in a special situations block trading team all contributed to our 14% growth in the first half of the year over the same period last year. We have experienced continued momentum in July.

Sequentially, second quarter brokerage net revenues were down 4% as a result of higher facilitation losses due to market conditions. While we experienced growth in Electronic Trading platform and positive results from Europe, these increases were offset by decline in our convertible trading business, which recorded an $800,000 loss as we wound down our principal trading operations.

We have now refocused our convertible trading effort to support our Investment Banking business and have significantly reduced the amount of regulatory capital deployed in this area from $42 million down to $7 million.

An aggregate of 3.520 million restricted stock equity unit awards will be granted as part of the special retention and incentive program to our senior employees of the firm, as a means of incentivizing and retaining our key producers. The portions of these awards being granted to employees will pickup after the end of the three year period. While the portion of these awards will be granted to executive committee members who are future performance based to update tie specifically to the firms previously stated long-term performance goals of $1 million in revenue per head. 10% net income margin and 20% return on equity.

While we are discussing equity grants, I will note that we are currently making major bonus payments to certain employees as we continue to integrate the historical compensation practices of Westwind with those of TWP. As is our normal practice, a portion of these bonus payments will be paid in the form of restricted stock units.

At the end of the first quarter we were authorized by our Board to repurchase up to 2 million shares, and we have been in the market repurchasing a total of 1.4 million shares. These shares will be used to partially offset our obligations to issue new shares to settle our issues that we are granting.

I will now turn the call back to Tom who will give additional details on our asset management business and closing remarks.

Thomas Weisel

Thanks Lionel. As I mentioned on our first quarter conference call, I am currently focusing my efforts on supporting our Investment Banking group and franchise development and business origination, as well as continuing to build our asset management business.

Paul Slivon our Chairman of Wealth Management is dedicating 100% of his time to our private clients business and aiding me in building our asset management business.

As part of our efforts to right size the cost associated with our business we have negotiated terms to partner with a third party with respect to managing and marketing our private equity fund of funds business in India. Under these terms we will retain an economic interest but we will no longer control the partnership. We anticipate the management team for this business will remain the same. We currently expect to complete this transaction by the end of this year.

During the second quarter our assets under management increased $50 million to $1.3 billion of which $45 million increase was related to raising additional funds. We will continue to raise funds for our existing asset management products and have several products in development. We hope to be able to announce new products by the end of the year and into 2009.

In closing up, I would like to reiterate that we are focusing on long-term value and building the earnings power of the company. We continue to hire top revenue producing talent in investing growth initiatives. We have taken steps to right size our business for revenue growth once the financial markets return to a more normal operating environment. Till that happens, we are in a good position to endure the current market downturn.

Question-and-Answer Session

Operator

(Operator Instructions). We'll go first to Rich Repetto with Sandler O'Neill.

Rich Repetto - Sandler O'Neill

Good evening guys.

Thomas Wiesel

Good evening, Rich.

Rich Repetto, Sandler O'Neill

I guess, first question, I think Lionel went through the backlog what is right now, you wouldn’t have it what it was prior period to 2Q going back? I know you said it was a lower you know otherwise?

Lionel Conacher

Rich I don’t have it right at my finger tip in terms of the exact numbers, but I can get back to you on that later today if you want.

Rich Repetto - Sandler O'Neill

Okay, fair enough. And then you went through to special retention, I didn’t - if you went pretty quickly to me. Could you go through that one more time?

Lionel Conacher

Sure. So in round numbers we are going to be issuing $3.5 million used to key producers within the firm including the executive committee. The bulk of the awards will be issued to key producers across all of the departments in the firm, and those will clip that at three years.

And then the award that are being issued to selected members of the Executive Committee, which specifically excludes Tom, myself, and Paul Slivon will be performance-based, and the issuance will be or the vesting will be on those will be directly tied to three performance criteria. One of which is the revenue per head metric of our stated goal of a $1.5; second on is our net income margin, which is stated as 10%, and the third one is our return on equity which is stated at 20%.

Rich Repetto - Sandler O'Neill

Okay, that helps. And I guess the last question, it’s a difficult environment. You have identified 3 million in expense cuts, and I'm just trying to give when will that get based in and then what does the comp look like? Would we just take this as sort of a run rate less the severance that was in there this quarter? Is that a fair way to look on it?

Shaun Stanley

Yeah I think the answer to your first question is, as you can see when you exclude the increase in amortization expense for Q2, you are already seeing a $900,000 decrease in non-comp, which is right on track with the plan to take a little over $3 million of non-comp out this year. That's what we've identified so far.

We’re continuing to work on more ideas in that area. As far as the comp ratio, I think it would be safe to assume that if the revenue conditions stay the same and we remain in this kind of market, that our comp ratios as you saw this quarter will remain consistent through the other two quarters this year.

Rich Repetto - Sandler O'Neill

Okay, and the 614, I had 673 headcount and I think that was an average number for 1Q, and I thought I heard you say 614 net. Is that an end of period number, for the headcount?

Lionel Conacher

Yeah, the 614 is as of end of June 30.

Rich Repetto - Sandler O'Neill

Okay, do you have what was at the end of March 31st.

Lionel Conacher

Off the top of my head I don't, and I'll get back to you with the exact number. Let me say it, it was probably pretty close to that, may be slightly higher, maybe like 620 as of the end of March. But I'll get back you with that. It’s higher that that, because we did the --.

Shaun Stanley

Yeah I am just thinking an [area].

Lionel Conacher

Yeah, we think we did the reduction in April. As of the end of the March 31, we would have been the north of 700, we’d more like 740 probably.

Rich Repetto - Sandler O'Neill

Okay that’s makes sense because the number you gave was a net 118 down or sure?

Lionel Conacher

That’s right. I got mixed up on my timing when we did the reduction of course.

Rich Repetto - Sandler O'Neill

Okay, thank you very much.

Operator

(Operator Instructions). We will go next to William Tanona with Goldman Sachs.

William Tanona - Goldman Sachs

Good evening guys; may be just a quick one in terms of capital management. Looking at where your stock is now, both below book and below tangible book, why not be and far more aggressive in terms of the share repurchase? It seems like that would be wise thing in terms of the capital management?

Shaun Stanley

See that’s a good question Bill. The balance that we are trying to strike is the balance of our deploying our capital in what we think is a profitable way by repurchasing our shares. The specific purpose for repurchasing our shares is to try and keep our outstanding share count relatively equal as we continue to issue our issues related to employment. And so that's sort of the general goal.

We are constantly looking out, particularly with the strength of our balance sheet and the cash resources that we have in hand today, with kind of look out in the future with our crystal ball, and really make a decision as to what amount of capital is prudent to keep on our balance sheet in order to allow us to continue to operate during these difficult times, relative to the near-term opportunity of deploying that capital by purchasing our stock at below tangible book.

William Tanona - Goldman Sachs

Obviously, you've got a lot of cash, how much of that cash is kind of deployable into those type of options? And how much of that is just working capital? And then for this environment, what do you view as being the right working capital, equity capital that you need in this type of environment?

Lionel Conacher

Well, to answer the first part of your question, we are currently authorized by the Board to purchase up to 2 million shares, and we purchased year-to-date about 1.4 million. So, we will continue with our program as the market opportunity presents itself. And on the second part of your question I'll hand it over to Shaugn Stanley to answer that.

Shaugn Stanley

Bill, we are comfortable with our level of working capital right now at the parent company level. And we've got a significant amount of the firm's capital deployed to capitalize the broker-dealer entities. At the time, currently we've got excess capital in the broker-dealers that are available if we need it to make more money available at the parent level. But we don’t have any current plans to do anything in terms of raising additional cash. We are very comfortable with both our cash and capital position. And like Lionel said we're just really keeping a close eye on our cash burn rate each quarter and being very careful about deploying cash.

William Tanona - Goldman Sachs

And then I guess the other question I'll ask is, thinking about the environment, looking at lot of your large cap peers, clearly I think you guys have an advantage relative to some of them, because you don’t have balance sheet issues. And it seems like your lack of profitability is coming from the blotted cost structure. And so what would it take to get far more aggressive on the compensation side to make that happen and to get yourself back to profitability? Because to me that seems like of much easier fix than a lot of the other larger investment banks who obviously have assets that they need to dispose off, and the markets which are out of their control. This seems like it's something more that you guys have control of.

Lionel Conacher

This is Lionel speaking. In terms of looking at our cost structure, I mean early on the year I think we were very aggressive in terms of the headcount reductions that we took. We took approximately 22%, which relative to the rest of the street, I think, is significantly higher. On the compensation side of things we have actually changed our compensation system to a much more production oriented system. And as time goes forward here you will see that compensation rises and falls much more directly in line with our revenue number.

From a break even stand point, as Shaugn mentioned earlier in the call, on a cash basis excluding non-cash items, we ended up consuming about $5 million of cash in the quarter. In order to turn that positive, we need to do $66 million of revenue versus the $60 million that we did. So actually very, very close to a break even run-rate.

And the leverage on the upside, when markets return, on our platform given our cost structure and given the platform that we have is very, very high.

Thomas Weisel

Let me just jump in here. Bill, we don’t plan on making substantial money given the revenue levels right now. We are planning in spaces that have just enormous profit opportunity when you return to a normalized area. And if started reducing productive headcount from here to make ourselves profitable, we would take away all the upside in the earnings power that we so hardly fought for over the last ten years.

So, we think we got tremendous earnings power in the upside, and we just don’t want to take away that kind of fire power once we return to normalized period. And if that’s a year or two, so be it. We are not burning at a very high cash rate right now. And we are able to retain our people at these comp levels, given the current revenue. And so this is essentially the way we are running the firm.

Shaugn Stanley

And Bill, I think your point was are we being aggressive enough given the fact that we don’t have any balance sheet issues or exposure to the credit and debt markets like some of the other competitors, or we are being aggressive enough. And I think you see that with the headcount reductions that we made of over 100 people, we've added back over 70 people in our key areas to add talent to the firm. So, I think we are being selective and aggressive when we identify someone that would be added to the platform.

William Tanona - Goldman Sachs

Okay, thank you. Understood and appreciate for taking the call.

Operator

We'll go next Lauren Smith, with KBW

Lauren Smith - KBW

I want to circle back please on compensation. I guess first the guarantees of some of the key hires you've made sort of on average. How long are those guarantees? Are they one two year kind of situation?

Lionel Conacher

Hi, Lauren its Lionel.

Lauren Smith - KBW

Hi, Lionel.

Lionel Conacher

Hi. In terms of current hires or recent hires and current year guarantees that we've made, essentially what we've done is when we've hired people mid-year, over the course of the past couple of months, what we've done is ensured that they would be otherwise walking away from at the front that they are at, that we are keeping them relatively whole on that.

None of the guarantees that we put in place extend out beyond the current year. In addition, we have been very progressive in the construct of the RSU grants that we've done for employees that are walking away from equity positioned at other firms and we've tied the best thing on those RSUs directly to their production levels in the coming months and years.

So we've kept our structure very much inline with the compensation system that we've rolled out across the balance of the firm, and directly in line with our compensation philosophies now.

Lauren Smith - KBW

Okay, thanks. That’s helpful. And I guess that generally obviously depending upon one position within the firm, I am sure the mix would be different. But for some of your more senior people, what's the mix of cash versus stock comp?

Lionel Conacher

At the highest levels it's about 60% cash, 40% equity. On average across the entire firm it's about 20%.

Shaun Stanley

80 - 20.

Lionel Conacher

Yeah, 80-20.

Lauren Smith - KBW

Okay. 80 obviously being, cash 20?

Lionel Conacher

Yeah.

Lauren Smith - KBW

Okay. And then when you talk about the 76 net hires, could you give a sense of what's like the distribution across the firm, whether its research sale, trading, banking, or is it pretty much evenly distributed? Or is there one area you feel where you really have the opportunity to beef up and/or upgrade?

Shaun Stanley

It's been relatively equal across the borders. I think the way I would answer the question more distinctly is saying that, the focus has been on adding production, as oppose to adding admin support and cost. Of the people that we've let go, the bulk of them have been on the peer cost and then off support side of things as oppose to revenue producers, with the exception of producers that have been under producers, significant under producers.

So we are really focused on adding producers across the platform in all departments. The area that you will see us continue to try and expand and increase our production is on the banking side, and in particular trying to add talent in the M&A Advisory area.

Lauren Smith - KBW

Okay, great. And then just shifting to the brokerage business for a minute; I guess two things, one your referenced loss ratios being higher in the quarter. Can you give us a sense of what would be average and how much higher than average have loss ratios been the last one or two quarters?

Shaun Stanley

Well, year-over-year they are actually down. Our overall retention ratio was 79% versus the 74% in the half last year. So our retention has been much higher. The quarter-over-quarter was slightly higher directly as a result of us [swindling] down on convert book, and we incurred some nominal losses there about $800,000 relative to the size of the capital that we had deployed against the market conditions. We were actually really pleased with how that went.

Lionel Conacher

Yeah Lauren, just add to that. For the US quarter-to-quarter our retention ratio in the US was 77% in Q2 compared to 81% in Q1. And in Canada the retention ratio improved substantially to 84% in Q2 compared to 70% in Q1.

Unidentified Analyst

Great. And then just one last on the brokerage business, last quarter you gave some helpful talking points that evidenced some of the positive momentum on the brokerage side, and in Canada and the cross-sell opportunities, specifically, that you had moved up number 16 from number 21 in the commission rankings. Is there anything, is that momentum continuing or any color that you might gives us there of how the two franchises are jelling together?

Thomas Weisel

That momentum has continued in Canada, although not quite as that high a substantial as it did from the end of last year to this year. Although, we've had weeks and months where we have been on the block trading rank, and it has been down as low as number 11 or 12. So we're definitely going in the right direction there. The other area that I want to point up is, we're really, really getting great traction over in Europe right now. And that's right across our entire research product base, but in particular selling US stocks into Europe we're really doing well there, and we're having some fantastic results over there right now.

And then the other area that is really starting to come on as well and showing the results of the investments that we made last year is on the electronic side. Lauren, I'd say those are the two big bright spots right there and third is that middle markets group that continues to perform well and fortunately the biggest drag for us is converts in the second quarter or else we would have shown, I think a sequentially up quarter. That drag will no longer exist, that will be absent, and if July is an indicator, that momentum in those areas continues robustly in the third quarter.

Unidentified Analyst

Right and just one last one. The mix of revenues last quarter were, 85%, 15% US and non U.S, similar mix or do they change meaningfully?

Thomas Weisel

Sorry, you mean on the brokerage side?

Unidentified Analyst

No, I am sorry, just in general, overall total company revenues. How you break it out by geography US and then other countries and last quarter was 84.9 and 15.1 to specific. So, I was just wondering if that mix had shifted at all?

Thomas Weisel

On the banking side last quarter we were 70% U.S., 25% Canada, 5% UK and then on the brokerage side, I got to do the math in my head here for that. It’s about the same, breaks out almost exactly the same.

Shaugn Stanley

70% U.S. little over 10%, 12% in Canada and just under 10% in Europe.

Unidentified Analyst

Great. Thanks so much for taking all my questions.

Operator

And that does conclude question-and-answer session today. At this time I would like to turn the call back over to Mr. Weisel, for closing remarks.

Thomas Weisel

We thank you for attending, and look forward to talking to many of you in the future. Thanks again.

Operator

That does conclude today’s teleconference. We thank you for your participation and wish you a wonderful day.

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